By Carla Mozee, MarketWatch Higher prices for computer games
help lift U.K. inflation
LONDON (MarketWatch) -- U.K. stocks rose Tuesday, with
AstraZeneca PLC shares higher on talk about the potential for a new
bid for the drug maker. At the same time, the pound advanced
against the dollar on an increase in U.K. inflation.
Inflation report: Inflation in the U.K. rose by 1.3% in October,
compared with 1.2% in September, according to data released by the
Office for National Statistics. That beat expectations for
inflation to come in at 1.2%. The rise sprung in part from smaller
declines in costs for motor fuels and airfares from the year-ago
period, the ONS said.
The pound (GBPUSD) rose to $1.5656 from $1.5643 ahead of the
data. Sterling traded at $1.5650 late Monday.
While the inflation rate in October moved higher, it's still
below the Bank of England's target of 2%. The recent jump in prices
appears to be "a blip, and the downward trend in inflation will
continue for the medium-term," said Kathleen Brooks, a research
director at Forex.com, in a note. If the "trend of weaker food and
energy prices continues then we could see further declines in CPI
in the coming months," she said.
The ONS noted that headline October reading rose as prices for
computer games increased. "The latest installment of the smash hit
'Call of Duty' was released last month, which may have added to the
upward pressure on prices," said Brooks.
"Call of Duty: Advanced Warfare" from Activision held the
top-selling position in the U.K. during the week ended Nov. 15,
according to market research firm Chart-Track.
Another try for AstraZeneca?: On the equity side, the FTSE 100
index rose 0.6% to 6,709.13, adding to Monday's rise of 0.3%, when
the market turned higher on the prospect of further monetary
stimulus for the eurozone from the European Central Bank.
AstraZeneca (AZN) shares sat near the top of the FTSE 100 as
they rose 1.4%, winning back losses from Monday's session after
U.S. drug maker Pfizer Inc. (PFE) said it's working with Germany's
Merck KGaA to develop a treatment for cancerous tumors.
On Tuesday, high-profile British investment manager Neil
Woodford wrote in a blog post that there is "a 50/50 likelihood
that Pfizer will approach AstraZeneca again." Pfizer in May walked
away from its efforts to purchase AstraZeneca.
Pfizer "doesn't really have a pipeline of new drugs but
AstraZeneca does," said Woodford. A purchase of AstraZeneca would
"solve a major problem" for Pfizer, particularly if AstraZeneca can
be scooped up "on the cheap," he said.
During Pfizer's initial buyout approach, "we strongly believed
that an independent AstraZeneca would achieve far better returns
for its shareholders than the offer from Pfizer could have
delivered," said Woodford. "That remains the case, although six
months on, our confidence in this belief is even stronger and the
progress being made by the company is tangible."
AstraZeneca on Tuesday said it expects to post annual revenues
of more than $45 billion by 2023, thanks to its pipeline of
drugs.
Meanwhile, shares of supermarkets finished lower after Kantar
Worldpanel said U.K. grocery sales fell 0.2% for the 12-weeks ended
Nov. 9, marking the first decline since Kantar began tracking such
data in 1994. Shares of Sainsbury PLC lost 0.6%, Tesco fell 0.5%,
and Wm Morrison Supermarkets PLC ended 0.2% lower.
"The fight for a bigger share of sales has ignited a price war
which means an average basket of everyday goods such as milk, bread
and vegetables now costs 0.4% less than it did this time last
year," wrote Fraser McKevitt, Kantar's head of retail and consumer
insight, in a note. "This is bad news for retailers, but good news
for shoppers with price deflation forecast to continue well into
2015."
Elsewhere, Prudential PLC shares climbed 0.5% after the insurer
said profit from new business rose 17% in the third quarter and
that it's confident about its prospects for the rest of the
year.
Meanwhile, EasyJet PLC said full-year profit rose 22%, aided in
part by strikes at rival carriers, but shares finished 1.8%
lower.
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